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Inflation in the Czech Republic has accelerated in recent months, so many small savers are rightly asking where to hide their savings from depreciation. In addition to investing directly in stock exchanges, there are a number of other options that can provide a solid return with acceptable risk.

 

When deciding where to invest, you need to answer a few basic questions: how much money, whether I want to invest once or regularly, how high a return I expect, how much risk I want to take or how long I can lack the money invested. Yield, risk and liquidity (or the opportunity to reach for money at any time) usually go against each other, so everything needs to be properly considered and ideally balanced.

 

One of the riskiest investments is the purchase of shares. Although we have seen general growth on world stock exchanges in the last year, it still depends very much on which specific title we want to buy. And to do that, we need to know a lot of information, which can be very time-consuming. On the other hand, holding money in a current or savings account can be considered the least risky. In that case, however, say goodbye to a solid return.

 

If you are among the investors who have the opportunity to set aside at least a few hundred crowns a month, then it is worth considering investing in investment funds. They operate on the basis of collective investment, which means that the money collected from small savers is invested in selected types of assets. These can be stocks, bonds, commodities, but also real estate or, more recently, cryptocurrencies. The advantage is that you do not have to monitor the movement of each individual asset, this is what the fund managers do for you. 

Some funds even invest based on calculations according to a set algorithm.

 

If you opt for a fund, you need to choose whether it will be an equity, bond, commodity, real estate or a mixed fund. You can find a specific offer of funds on the websites of every domestic bank. In addition to the current return of the fund, it is also advisable to find out under what conditions you can invest in the fund. Be especially interested in investment fees. It is these fees that can affect the final percentage of the appreciation of your money.

 

If you are a conservative investor who has the opportunity to lack a certain amount of money within a time horizon of five years, you may be interested in buying bonds. However, there are many of them on the market as well. Government bonds are considered the safest, but there are also bonds of private companies. If you are investing in these, you should require all the important information: What is the minimum amount you need to invest, what is the interest, whether it is paid annually (quarterly or at once after maturity), what is the maturity of the bond and also in which sector the corporation that issues the bond operates, or how long it has been on the market and whether it has any bond history. In the case of bonds, some banks can also advise you, because they are often the entity that issues corporate bonds to a particular company.

 

Quite a lot of people are still seeking the appreciation of their money through building savings. The advantage is a very low risk, the possibility of drawing a state contribution and also that the money deposited here is legally insured up to 100 thousand euros. The disadvantage is the need to deposit funds for at least six years. You can reach for the savings earlier, but you will lose the state contribution paid so far and you will probably still pay a penalty to the building society for the early withdrawal of the accumulated money.

 

If you are considering a long-term investment, it is also worth considering one of the endowment life insurance products, which also has its own savings component. The money saved in it is not insured, and in order for such an investment to make sense, it is usually good to save money in this way for at least ten years. Please note that you should also be interested in the amount of fees here.

 

Sources:

https://www.csob.cz/portal/lide/investicni-produkty/podilove-fondy

https://www.csas.cz/cs/osobni-finance/investovani

https://www.kb.cz/cs/obcane/investice

https://www.moneta.cz/sporeni-a-investice/podilove-fondy

https://www.amundi.cz/produkty/Fondy/Prehled-fondu

https://www.finance.cz/pojisteni/osoby/zivotni-pojisteni/kapitalove/

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The content of this material constitutes marketing communication and should not be considered as any type of investment advice and/or investment research and/or a solicitation for any transactions. This material was prepared for informational/educational purposes only and does not imply an obligation to perform investment transactions nor does it guarantee or predict future performance. BCM Begin Capital Markets Cy Ltd and its relevant persons including affiliates, agents, directors, or employees do not guarantee the accuracy, validity, timeliness, or completeness of any information/data provided by third parties and assume no liability for any loss arising from any investment made based on the said information/data. Past performance is no guarantee of future results.

Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79.41 % of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please read the Risk Disclosure.